Salim Carelessly Makes a Check for $100 to Abel in a Way

question 41

Multiple Choice

Salim carelessly makes a check for $100 to Abel in a way that makes it possible for someone to easily alter it. Abel alters the check to read $1,000. Under these circumstances, _____.

• A) if the drawee bank pays the check to Abel in good faith, it can charge the $1,000 to Salim's account
• B) a drawee bank can charge the $100 to Salim's account and will be liable for the rest of the altered amount
• C) the drawee bank is completely liable to Salim for accepting the altered check even if Salim's negligence contributed to the alteration
• D) Abel is liable to the drawee bank and the bank cannot charge the $1,000 to Salim's account

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Definitions:

Discount Rate

An interest rate used to discount future cash flows to their present value, often central in determining the value of investments.

Trust Fund

A fund comprised of a variety of assets intended to provide benefits to an individual, group, or organization.

Annual Percentage Rate

A measure of the cost of credit, expressed as a yearly interest rate.

Annual Percentage Rate

The yearly interest rate charged on borrowed money, including fees and other costs associated with the loan.